Malaysia factories return to growth as orders rebound
Malaysia’s October manufacturing survey moved back above the expansion threshold as orders recovered and output rose for the first time in three months. Demand for products linked to artificial intelligence helped new business. Manufacturers hired and bought more inputs, while delivery problems and higher expenses persisted. Confidence about the outlook weakened despite the improvement in current activity.
Economics & Markets··Midday
Orders lift manufacturing above the growth threshold
Malaysia’s factories reported improving conditions in October as their manufacturing Purchasing Managers’ Index (PMI) reached 51.0, up from September’s 49.9. The seasonally adjusted survey, compiled by business-information provider S&P Global, showed the strongest improvement since April. The indicator separates expanding from contracting conditions at 50. Four of the latest five survey periods have brought an improvement in operating conditions.[1], [2]
Existing customers placed more business, and new-order growth ranked among the fastest in four and a half years. Maryam Baluch, an economist at S&P Global Market Intelligence, linked part of the recovery to demand for products associated with artificial intelligence. Production increased for the first time in three months, although the rise in output was marginal.[1], [2]
Manufacturers hire while delivery problems persist
Firms expanded their workforces for a third consecutive month. They also increased purchases of inputs for the first time in three months to support higher output and sales. Baluch described businesses as seeking to expand operating capacity. Some manufacturers drew down finished-goods inventories to fulfil customers’ orders while pressures on their supply chains continued.[1], [2]
Delays in receiving inputs extended to an eleventh month. Port congestion was among the reasons suppliers took longer to deliver. The delays were less severe than in September, and purchased-input inventories increased marginally for a second consecutive month. Companies therefore reported both continued disruption in deliveries and some easing compared with the preceding survey.[1]
Higher expenses weaken manufacturers’ confidence
Transport and raw-material expenses rose, with the Middle East war identified as one contributor to the pressure. Manufacturers responded by raising selling prices. Concern over expenses, alongside uncertainty about economic and geopolitical conditions, reduced optimism to its lowest level since April. Baluch identified external difficulties as a threat to the economy’s resilience.[1], [2]
S&P Global nevertheless assessed the October responses as consistent with continued growth in industrial production and gross domestic product during the fourth quarter, with momentum improving from the third. That was the survey provider’s assessment of the outlook as current orders and output improved.[1]
